Cryptocurrencies are certainly not for everybody's portfolio, but no matter what you think about Bitcoin, getting in on the digital payment industry is a huge part of both the future of banking and digital payments.
We are not particular fans of Bitcoin, so let’s just say that this is icing on the cake as far as our great regard for PayPal.
In the past 12 months, the stock went from $85 to $245, marking a gain of more than 185%. This huge bull run has not gone unnoticed and is one of our best-performing stocks in our portfolios.
Last October the company announced it was launching a new service only for the US for now enabling users to buy, hold, and sell Bitcoin and a group of other cryptocurrencies directly from their PayPal accounts.
The company said that by early 2021 its customers would be able to use cryptocurrencies to pay for things from its network of 26 million merchants.
Whether people want to use this system or not, is beside the point because PayPal is proving both to the market and consumers that digital payments using blockchain technology will be available to them if they want to use it.
PayPal already runs a solid business so it doesn't need to rely on crypto to succeed. The company's latest earnings report showed $6.1 billion in revenue in 4Q20, a 23% increase year-over-year from $5.0 billion.
That critical measure of total payment volume rose 39% YoY to $280 billion in the quarter, and earnings came in at $1.00 per share, up 29% YoY. The stay at home environment of Covid-19 helped PayPal, and we saw revenue grow 21%, a huge increase from a large base to begin with.
Another important metric is new active accounts. This was also a big positive with an added 73 million new accounts for the year, giving the company a total of 375 million accounts, an unbelievably huge number.
While the stock has pared some of its gains since reaching over $300 in mid-February, its rock solid business and its potential in the cryptocurrency space mean that it will continue to be an opportunity for investors. The stock is climbing toward our target of $285 — but, nevertheless, PayPal remains a stock we would not sell.